Research On The Number Of Supplier Selection And Quantity Allocation Strategy Based On Diversification Benefit

The purchasing question under the supply chain environment is one of the important contents of supplying chain management.One of the important areas in purchasing research that has significant practical implications is vendor selection problem.Selecting the right vendor significantly reduces the purchasing cost and improves corporate compete-tiveness. At present, many scholar both inside and outside China have made a great amount of study on the problem of supplier selection, most of the study lay particular stress on appraise to supplier criterion. However, facing a set of approved supplier base which meet the quality, delivery, and other objectives of the firm, the firm must decide the specific subset of suppliers which will actually receive an order to fill demand for a specific product and quantity allocation among the selected suppliers. This issue gets a little attention in our country, so this paper will focus on it.On the basis of the present documents, relying on the classic newsvendor problem and introducing the diversification benefits function and the element of supplier capacity, this paper analyzes single period, single product souring decisions from the quantitative point of view under demand uncertainty and unreliable supply, which is about selecting supplier from the approved supply base and allocating quantity among the specific subset of suppliers.We also characterize conditions under which single-souring and multiple-souring strategies are optimal according to the conclusion. A unique feature of our approach is the integration of a firm specific supplier diversification function, we'll expatiate on it particularly. Analytic and numerical analysis of the model show single sourcing is only optimal when supplier is uncapacitied and the diversification benefits are not considered. When positive net diversification benefits are incorporated, then multiple supplier sourcing strategies are always optimal where the number of suppliers is determined by the diversification benefit function, furthermore, we introduce a method of allocating quantity among the selected suppliers.In the next place, we extend our model to examine the impact of including a minimum order quantity when souring from a supplier based on the paper. It shows the optimal supplier number is always lower than that when there is no a minimum order quantity. A lower effective minimum order quantity is economically preferable under some cases. Moreover we find the flexibility of a supplier may have greater bearing on selection than unit cost.Finally, we examine the robustness of our results through an extensive numerical analysis of the key parameters of our model.